It’s that time of year again, when Revenue is keen to tell us just how many of us have underpaid tax – and more fortuitously perhaps, those who have paid too much.
Yes, while the tax season for the self-employed is around October-November, efforts to get more people involved in their tax affairs now means Revenue offers all PAYE taxpayers an update of their tax affairs each January through a Preliminary End of Year Statement (PEOYS). This outlines whether or not an individual’s tax affairs are balanced, or whether or not they may owe tax – or may be owed a refund.
So if you want to find out if you’re one of the 500,000 or so taxpayers in line for a refund this year, here’s how you can go about it.
[ Most workers failing to claim tax refunds, survey findsOpens in new window ]
What is a PEOYS?
The PEOYS sets out a provisional tax position, based on information available on Revenue records, and will show the amount of income tax and universal social charge (USC) the individual paid for the year, and whether they have a balanced record or they have potentially underpaid or overpaid tax.
To have a look at your statement, you simply log into myAccount, and access it by choosing “Review Your Tax 2019-2022″.
To date, Revenue figures show that more than 370,000 tax returns by PAYE workers have already been filed for 2022, up by more than 30 per cent on the same period last year.
Of these, 40,000, or 10 per cent were “balanced”, indicating that they neither owe, nor are owed, money, or at least not more than €10, according to a Revenue definition, while 55,000, or 15 per cent, paid too little tax, of some €7.6 million, or on average €138 each. This is being collected through a reduction in the individuals’ tax credits for 2024.
Most significant perhaps, is the fact that 275,000, or 75 per cent of those who filed, got a refund, of an average €701 each.
[ Revenue reports steep rise in number of income tax returns by PAYE workersOpens in new window ]
Haven’t filed yet?
According to Revenue data, about 2.3 million taxpayer “units” – which could refer to individuals or married couples – have yet to file tax returns.
And for 62 per cent, it may not matter, as their tax affairs are “balanced”, while more than a quarter of a million, or some 287,200, paid too little tax last year, and owe a combined €118 million, or on average €410 each.
The good news, however, is that the figures show that more than half a million, or some 563,300 taxpayers, did in fact pay too much tax last year, to the tune of some €400 million. On average, then, each of these taxpayers is owed €710, although the sums will obviously differ from person to person.
But we can look even more closely at what people are owed, thanks to a breakdown that shows that the greatest number of taxpayers (155,800) are owed €10-€50. However, almost 200,000 are owed more than €500, and 121,000 more than €1,000.
Not only that, but more than 5,000 taxpayers are owed “on average” €6,679 each. Not a bad start to the new year.
What about those who owe tax?
Of the more than 250,000 who owe tax, the vast majority (239,000) owe less than €500. But there is a cohort who could get a nasty surprise, with Revenue figures showing that some 700 “units” owe more than €5,000, or an average of €7,529 each.
Could I be owed money?
Who doesn’t submit a tax return in the hope that they’ll get some money back? Or opt not to do it all, for fear it will be revealed that you underpaid tax and in fact owe Revenue.
If you are owed money – or indeed owe money – it’s likely that you’ll receive a letter asking you to submit a return. Last year Revenue wrote to more than 400,000 taxpayers “where our records indicated that they may have overpaid or underpaid tax”.
In 2021, some 1.6 million taxpayers did not file (or at least have not yet filed) a tax return. Of these, more than 300,000 had potentially overpaid tax, of up to €182 million – or about €560 each. On the other hand, more than 200,000 underpaid tax, Revenue says, of up to €114 million – or about €515 each.
So, there may be an obvious reluctance to submit a form for fear you come out on the wrong side of the balancing equation. If you did pay too little tax – and remember for most people this will be less than €500, or about €10 a month over four years – you won’t be asked to pay it in full straight away. Rather, the underpayment can be collected interest free over four years by reducing their tax credits.
If you underpaid, Revenue says “any refund due will be in their bank account within three to five working days”.
Can I get more money back?
Once you’ve received your PEOYS, you can then go ahead and finalise your tax position for 2022 (or any other year in the four years previous) by completing an income tax return.
Remember, the PEOYS is a provisional figure, so if you owe money, this might be defrayed by additional credits you can claim by filing an income tax return, while if Revenue owes you money, you might even stand to get more back at the end of the process.
As Revenue notes, “depending on the credits and reliefs claimed, the final tax position may differ from the PEOYS”.
Common credits claimed this way include the new rent credit (worth €500 a year for individual taxpayers and up to €1,000 per year for jointly assessed married couples or civil partners), health expenses, and flat rate expenses. Remember, you don’t have to wait until your PEOYS is issued to claim many credits; tax credits such as rent tax credit, health expenses and remote working relief can be claimed in real time during the year via “Manage your tax 2023″ option in myAccount.
Once a return has been submitted, a Statement of Liability will issue shortly thereafter, setting out your final tax and USC position for the year. This is where you’ll find out your final tax position, and exactly how much you owe, or are owed.
If you do owe tax, or suspect that you might, the temptation may be to simply do nothing. However, this doesn’t mean that your problem will just go away.
According to a Revenue spokesman, the tax agency will engage with individuals “where appropriate”, who have an underpayment and who do not file a return, to ensure amounts owed will be collected.
A Revenue spokesman says PAYE taxpayers should submit a return “where they wish to claim additional credits or reliefs to which they may be entitled”. This means that while there is largely no obligation to do so, it may be in your best interests to file a return
Who has to file a tax return?
While most people are aware that those who are self-employed must file a Form 11 every October-November, it’s a little less clear when it comes to PAYE workers.
A Revenue spokesman says PAYE taxpayers should submit a return “where they wish to claim additional credits or reliefs to which they may be entitled”. This means that while there is largely no obligation to do so, it may be in your best interests to file a return, particularly if you suspect you overpaid tax, or you wish to claim for additional credits, such as the new rent credit or health expenses.
And in some cases, there is an obligation to file, if requested to do so by Revenue. “Revenue may require PAYE employees to file where we believe they have underpaid their tax or have income that was not taxed through the PAYE system and should be declared on their income tax return,” says the spokesman.
Where once you filed a balancing statement, the so-called P-21, to get an assessment of your tax affairs, now the move towards “statement of liability” means more and more people are being drawn into the tax return net.
Last year some 1.1 million taxpayers filed a return for 2021, which means there is a further 1.6 million left to do so.
Should this move to tax returns strike fear into your heart, it should be noted however that filing a return as a PAYE worker is a straightforward and quick endeavour. The forms are pre-populated with information already on your record, and can be done online through myAccount. Remember the four-year rule when it comes to claiming additional credits or reliefs.
